{"id":1351,"date":"2016-09-30T16:24:03","date_gmt":"2016-09-30T16:24:03","guid":{"rendered":"http:\/\/threeworlds.campaignstrategy.org\/?p=1351"},"modified":"2016-09-30T16:24:03","modified_gmt":"2016-09-30T16:24:03","slug":"positive-money-give-us-back-our-currencies","status":"publish","type":"post","link":"https:\/\/threeworlds.campaignstrategy.org\/?p=1351","title":{"rendered":"Positive Money: Give Us Back Our Currencies"},"content":{"rendered":"

(This is the first of three blogs about innovative developments in economics and business which, it seems to me, may have a big effect on many campaigns)<\/em><\/p>\n

\"positive-money-graphic-3\"<\/p>\n

To my mind one of the most interesting new campaigns of recent years is Positive Money<\/a> (PM), set up in 2010.\u00a0 Yes it\u2019s about economics but if you think it\u2019s not really relevant to your campaigns, you are probably wrong.\u00a0 I suggest checking it out.<\/p>\n

If you\u2019ve not heard of Positive Money it\u2019s probably because for a \u2018campaign\u2019 it is incredibly (to use an Anglicism) pointy-headed.\u00a0 It is full of really brainy people<\/a> who mostly have little track record in the darker arts of campaigning (media, politics, advertising, marketing, state power, psychology, religion etc) but who know loads about economics.\u00a0 Such cleverness can be both a strength and a weakness, as campaigns need to be put in very simple terms if they are to gain public leverage.<\/p>\n

Pincer Movement Potential<\/strong><\/p>\n

So far Positive Money hasn\u2019t come up with campaigns that capture the public or hence media or indeed mainstream political attention but I think it may well do, only rather than bottom-up, it\u2019s working its way down from the top.\u00a0 In some ways it\u2019s what the 1%\/99% \u2018bottom-up\u2019 movement always needed to meet coming down, in order to create a pincer-movement with potential for systematic real change in real time.<\/p>\n

A possible deficit of street-fighting tacticians aside, Positive Money has a basic problem in that it is selling, indeed inspired by, what for most of us is a very unexpected insight.\u00a0 This insight is that almost all of what we think of as \u2018money\u2019 is now not so much \u2018currency\u2019 (coins, bank notes) but electronic money, such as debt.\u00a0 Indeed it is the issuing of debt by banks (such as mortgages for houses and other lending by commercial banks), which creates<\/em> most of the money in a modern economy.\u00a0 97% of the money in the UK, says Positive Money (and it cites lots of evidence such as from Bank of England economists) is this non-currency money.\u00a0 Like many ideas which could have a revolutionary effect, it’s counter-intuitive and so people don’t immediately spring to act on it.<\/p>\n

The Grip of Death Moment<\/strong><\/p>\n

By his own account<\/a> Ben Dyson the founder of Positive Money, was set on the campaign trail by a theory in the book he read called The<\/em> Grip of Death.<\/em> \u00a0This explained \u2018why most economic theories failed, and why governments were usually unsuccessful in manipulating the economy\u2019, because \u2018almost all money is now created by commercial (high-street) banks, as debt, when they issue loans\u2019.\u00a0 Lots of bad stuff followed such as financial crashes when \u2018expert\u2019 economists who themselves did not understand this, tried to deploy \u2018conventional\u2019 policy measures to which might old style economies running on real money might have responded but to which modern economies full of electronic debt did not respond.<\/p>\n

\"positive-money-graphic-1\"<\/p>\n

I found this fascinating but anyone who knew much about campaigns would see the pitfall: Positive Money was then drawn into an educational<\/em> campaign, which is largely incompatible with instrumental campaigning. \u00a0It\u2019s been on a bit of a mission-to-explain<\/a>. \u00a0The two things can hardly ever be done at the same time.<\/p>\n

Positive Money\u2019s central proposition<\/a> which can get rather lost in a forest of stuff about why-it\u2019s-a-good-idea to reform aspects of the banking and finance system, is to:<\/p>\n

\u2018remove the ability of banks to create money, in the form of bank deposits, when they make loans … [and] \u00a0transfer the ability to create new money exclusively to the state, creating what we have termed a \u2018sovereign money\u2019 system\u2019<\/em>.<\/p>\n

This is what they mean by \u2018Positive Money\u2019, and although \u2018Democratic Money\u2019 might possibly get you there quicker, the central idea is highly political and quite understandable:\u00a0 that creation of money should be under democratic control, and that means it should be controlled by elected, accountable politicians because control of the creation of money \u2013 how much, when and what for \u2013 is of crucial public interest.\u00a0 \u00a0Left to itself, with each cycle the \u2018market\u2019 operation of the system just ratchets up the difference between rich and poor, making the disparity greater and greater.<\/p>\n

\"positive-money-graphic-4\"<\/p>\n

Put simply, the proposition is to ask who should be in charge of our national currency, the nation or the banks ?\u00a0\u00a0 A case maybe of \u201cgive us back our money\u201d which for most people would be awfully similar to \u201cgive us back our money\u201d.\u00a0 What other metaphors might one use ? \u00a0\u2018Robbery\u2019 perhaps, springs to mind.<\/p>\n

QE or Public Money ?<\/strong><\/p>\n

This summer, Positive Money got a bit of a gift when a side effect of the UK EU Referendum vote for Brexit was a political crisis, which led to a fall in the value of the Pound Sterling and in turn a new Conservative Government, which promptly jettisoned<\/a> previous Chancellor George Osborne\u2019s policies of austerity and \u2018balancing the books\u2019.\u00a0 So in August to try and boost growth, the Bank of England set out on a new round of QE or Quantitative Easing, often called \u2018printing money\u2019.<\/p>\n

\"positive-money-graphic-5\"<\/p>\n

outside the Bank of England with a message<\/em><\/p>\n

This gave Positive Money a chance to campaign about a real choice by calling<\/a> on new Chancellor Philip Hammond to convert this newly created \u2018money\u2019 into real money and not just the electronic value of stocks and shares.\u00a0 Such stocks and shares are mainly held by the wealthy as investments.\u00a0 Positive Money point out that the previous UK round of QE increased the wealth of each of the richest 5% of households by an average of \u00a3128,000, thereby also increasing inequality, which the government is supposedly against.<\/p>\n

Instead, Positive Money argues, and an increasing number of economists agree<\/a> with them, that the Bank should create money and put it into the real economy, in ways that mean it gets spent and creates work here and now.\u00a0 Either as \u2018helicopter money\u2019 whereby individuals get cash (which in the case of poorer people they are likely to spend), or, by investment in infrastructure projects, which also create real world economic activity including jobs, also leading to cash in circulation.<\/p>\n

So why doesn\u2019t QE normally do this ? Even at Positive Money\u2019s own website you have to drill down to get the details<\/a> but as I understand it, essentially it\u2019s because the government gives the money to financial institutions and banks not to people to spend, or to itself to spend.\u00a0 Under QE the Bank of England creates a new \u2018reserve\u2019 account for itself and uses it to buy up \u2018government bonds\u2019 from pension funds or insurance companies. \u00a0\u2018Money\u2019 then appears in the bank account of a Pension fund, such as in RBS.\u00a0 \u00a0Only if this then gets spent will it benefit the real economy.\u00a0 Seeing as the wealthier shareholders in Pension Funds \u00a0don\u2019t need to spend it like the poor do, they mostly don\u2019t: as a result, \u00a3375bn of QE produced only about \u00a325bn economic activity in the real economy.<\/p>\n

Positive Money says the Bank of England should give the money straight to people, especially poorer ones, or to the government, which should then spend it on infrastructure.<\/p>\n

\"positive-money-graphic-2\"<\/p>\n

Relevance to Campaigns<\/strong><\/p>\n

If your campaign issue has anything to do with trying to or needing to reduce inequality, it is self-evident that taking control of the creation and direction of money into public hands, could play a huge role in shaping outcomes.<\/p>\n

This has also to be one of the best ways of seriously using money to resolve critical practical problems for instance in the environment, and there is coincidence of interests between those wanting to achieve outcomes that rely on new investment (such as energy or transport infrastructure, or buying and managing forests), and those who want to stimulate flagging economies, such as politicians.<\/p>\n

Tackling climate change is perhaps the most obvious example. If for instance we had a global decade or so of green investing to replace the old fossil based economy with a renewable-powered economic base, we\u2019d be a long way down the track to implementing what governments promised in Paris. \u00a0(The necessary investment cost has been put at $270bn<\/a> out of $6trillion spent globally on new infrastructure a year, or just 4.5%).<\/p>\n

Positive Money can be contacted at www.positivemoney.org<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

(This is the first of three blogs about innovative developments in economics and business which, it seems to me, may have a big effect on many campaigns) To my mind one of the most interesting new campaigns of recent years … Continue reading →<\/span><\/a><\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1351","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/threeworlds.campaignstrategy.org\/index.php?rest_route=\/wp\/v2\/posts\/1351","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/threeworlds.campaignstrategy.org\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/threeworlds.campaignstrategy.org\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/threeworlds.campaignstrategy.org\/index.php?rest_route=\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/threeworlds.campaignstrategy.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1351"}],"version-history":[{"count":4,"href":"https:\/\/threeworlds.campaignstrategy.org\/index.php?rest_route=\/wp\/v2\/posts\/1351\/revisions"}],"predecessor-version":[{"id":1360,"href":"https:\/\/threeworlds.campaignstrategy.org\/index.php?rest_route=\/wp\/v2\/posts\/1351\/revisions\/1360"}],"wp:attachment":[{"href":"https:\/\/threeworlds.campaignstrategy.org\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1351"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/threeworlds.campaignstrategy.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1351"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/threeworlds.campaignstrategy.org\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1351"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}